nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2005‒09‒17
seven papers chosen by
Maximo Rossi
Universidad de la República

  1. Individual Wage Setting, Efficiency Wages and Productivity in Sweden By Lundborg, Per
  2. The Existence and Persistence of Long Work Hours By Robert Drago; David Black; Mark Wooden
  3. Institutions, Markets and Men’s and Women’s Wage Inequality: Evidence from Ukraine By Ina Ganguli; Katherine Terrell
  4. Religious Affiliation and Participation as Determinants of Women’s Educational Attainment and Wages By Evelyn Lehrer
  5. Why Is the Payoff to Schooling Smaller for Immigrants? By Barry R. Chiswick; Paul W. Miller
  6. The 2004 Global Labor Survey: Workplace Institutions and Practices Around the World By Davin Chor; Richard B. Freeman
  7. Workplace Segregation in the United States: Race, Ethnicity, and Skill By Judith Hellerstein; David Neumark

  1. By: Lundborg, Per (Trade Union Institute for Economic Research)
    Abstract: Swedish wage setting has undergone drastic changes during the last 10-15 years. While Sweden was known for its narrow wage distribution, wage differentiation and wage bargaining at the individual level has become leading principles among white-collar workers’ unions. The purpose of the present paper is to analyse the consequences of this wage policy shift. Wage differences have increased drastically among white-collar workers while remained constant or even decreased among blue collar workers. We show that wage differentiation has had a strong effect on white collar workers’ average wage, and caused a major increase in the wage gap between the aggregates of whitecollar and blue-collar workers. We also show that increases in the coefficient of variation of wages raise productivity in firms with many workers in that worker category. Last and foremost, we show that the transition to individual wage setting raises the scope for firms to set efficiency wages and we find support for the fair wage version of efficiency wage setting. The effects of higher wage/fair wage rates were stronger in the late 1990s, when wage differentiation increased more, than in the early 2000s.
    Keywords: Efficiency wages; productivity; wage differentials
    JEL: J31 J41 J51
    Date: 2005–09–09
    URL: http://d.repec.org/n?u=RePEc:hhs:fiefwp:0205&r=ltv
  2. By: Robert Drago (Pennsylvania State University); David Black (Melbourne Institute of Applied Economic and Social Research, University of Melbourne); Mark Wooden (Melbourne Institute of Applied Economic and Social Research, University of Melbourne and IZA Bonn)
    Abstract: Previous research hypothesizes that long working hours are related to consumerism, the ideal worker norm, high levels of human capital, and a high cost-of-job-loss. The authors test these hypotheses using panel data on working hours for an Australian sample of full-time employed workers. Analyses include a static cross-sectional model and a persistence model for long hours over time. The results suggest that long hours (50 or more hours in a usual week) are often persistent, and provide strongest support for the consumerism hypothesis, with some support for the ideal worker norm and human capital hypotheses, and no support for the cost-of-job-loss hypothesis. Other results are consistent with a backward-bending supply of long hours, and with multiple job holders and the self-employed working long hours.
    Keywords: HILDA Survey, overwork, working hours
    JEL: J22
    Date: 2005–07
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp1720&r=ltv
  3. By: Ina Ganguli (Harvard University); Katherine Terrell (University of Michigan, Ann Arbor and IZA Bonn)
    Abstract: Ukraine, the second largest country in the former Soviet bloc, is facing the challenge of rallying popular support for major structural reforms. As in most developing economies, the "Orange Revolution" government’s success will depend on its ability to keep income distribution within an acceptable range. This paper is the first to make use of recent methodological developments in Lemieux’s (2002) decomposition method to advance our understanding of the determinants of wage inequality in developing and transition economies. With an eye toward future policy, we apply this approach to the first large longitudinal micro data set for Ukraine - the Ukrainian Longitudinal Monitoring Survey (ULMS) - to determine the extent to which the introduction of markets and new institutions affected men’s and women’s wage inequality between 1986 and 2003. We find that wage inequality rises substantially for both men and women. Applying the Lemieux method, we show that market forces drive the increase in inequality through changes in wage premiums, but the changes in the composition of the labor force (selection) generally contribute to a reduction in wage inequality; the exception is that changes in women’s labor composition contribute to an increase in inequality in the top half of their wage distribution. Finally, changes in unobservable characteristics work toward increasing inequality for both men and women. The institution of the minimum wage plays an important role in lowering the growth in inequality, more for women than for men. Going forward, if the government wants to ameliorate the effects of market forces on wage inequality, it should recognize the importance of maintaining the value of, and compliance with, the minimum wage.
    Keywords: gender, inequality, semi-parametric estimation, transition, wages, Ukraine
    JEL: C14 I2 J16
    Date: 2005–07
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp1724&r=ltv
  4. By: Evelyn Lehrer (University of Illinois at Chicago and IZA Bonn)
    Abstract: Using a human capital model, this paper develops hypotheses about how religious affiliation and participation during childhood influence years of schooling completed and subsequent performance in the labor market as measured by wages. The hypotheses are tested using data from the 1995 National Survey of Family Growth, a large-scale survey addressed to a representative sample of women in the United States. Religious affiliation is found to have a significant impact on years of schooling completed, with the effects being particularly pronounced for Jews and conservative Protestants. The impact of religious affiliation on wages largely mirrors its influence on educational attainment, although evidence of additional effects operating through other channels is also uncovered. In addition, the results show that youth who attend religious services frequently during childhood go on to complete more years of schooling than their less observant counterparts.
    Keywords: religion, education, wages
    JEL: J24 J31
    Date: 2005–07
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp1725&r=ltv
  5. By: Barry R. Chiswick (University of Illinois at Chicago and IZA Bonn); Paul W. Miller (University of Western Australia and IZA Bonn)
    Abstract: This paper is concerned with why immigrants appear to have consistently lower partial effects of schooling on earnings than the native born, both across destinations and in different time periods within countries. It uses the Over-Under-Required education approach to occupations, a new decomposition technique developed especially for this approach, and data from the 2000 Census of the United States. Based on the average (mean or mode) level of schooling in their occupation, the schooling of the native and foreign born adult men is divided into the "required" (average) level, and years of under- or overeducation. Immigrants have a wider variance in schooling, with an especially large proportion undereducated given the average schooling level in their occupation. Immigrants are shown to receive approximately the same rate of return to the "required" (occupational norm) level of education, but experience a smaller negative effect of years of undereducation, and to a lesser extent a small positive effect of overeducation. About two-thirds of the smaller effect of schooling on earnings for immigrants is due to their different payoffs to undereducation and overeducation. The remainder is largely due to their different distribution of years of schooling. The country-of-origin differences in the returns to under- and overeducation are consistent with country differences in the international transferability of skills to the US and the favorable selectivity of economic migrants, especially those from countries other than the English-speaking developed countries.
    Keywords: immigrants, schooling, occupations, earnings, rates of return, selectivity
    JEL: F22 I21 J24 J31 J61
    Date: 2005–08
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp1731&r=ltv
  6. By: Davin Chor; Richard B. Freeman
    Abstract: The 2004 Global Labor Survey (GLS) is an Internet-based survey that seeks to measure de facto labor practices in countries around the world, covering issues such as freedom of association, the regulation of work contracts, employee benefits and the prevalence of collective bargaining. To find out about de facto practices, the GLS invited labor practitioners, ranging from union officials and activists to professors of labor law and industrial relations, to report on conditions in their country. Over 1,500 persons responded, which allowed us to create indices of practices in ten broad areas for 33 countries. The GLS' focus on de facto labor practices contrasts with recent studies of de jure labor regulations (Botero et al., 2004) and with more limited efforts to measure labor practices as part of surveys of economic freedom (Fraser Institute) and competitiveness (World Economic Forum). Although our pool of respondents differs greatly from the conservative foundations and business leaders who contribute respectively to the Fraser Institute and World Economic Forum reports, the GLS and the labor market components of the economic freedom and competitiveness measures give similar pictures of labor practices across countries. This similarity across respondents with different economic interests and ideological perspectives suggests that they are all reporting on labor market realities in a relatively unbiased way. As a broad summary statement, the GLS shows that practices favorable to workers are more prevalent in countries with high levels of income per capita; are associated with less income inequality; are unrelated to aggregate growth rates; but are modestly positively associated with unemployment.
    Date: 2005–09
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:11598&r=ltv
  7. By: Judith Hellerstein; David Neumark
    Abstract: We study workplace segregation in the United States using a unique matched employer-employee data set that we have created. We present measures of workplace segregation by education and language–as skilled workers may be more complementary with other skilled workers than with unskilled workers–and by race and ethnicity, using simulation methods to measure segregation beyond what would occur randomly as workers are distributed across establishments. We also assess the role of education- and language-related skill differentials in generating workplace segregation by race and ethnicity, as skill is often correlated with race and ethnicity. Finally, we attempt to distinguish between segregation by skill based on general crowding of unskilled poor English speakers into a narrow set of jobs, and segregation based on common language for reasons such as complementarity among workers speaking the same language. Our results indicate that there is considerable segregation by education and language in the workplace. Racial segregation in the workplace is of the same order of magnitude as education segregation, and segregation between Hispanics and whites is larger yet. Only a tiny portion of racial segregation in the workplace is driven by education differences between blacks and whites, but a substantial fraction of ethnic segregation in the workplace can be attributed to differences in language proficiency.
    Date: 2005–09
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:11599&r=ltv

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